Limited Scope Audit

[Disco Stu]

Twice in the last two weeks, I've had an auditor tell me that they cannot perform a limited scope audit if a plan is self trusteed. The first auditor was from a firm that I'm usually sceptical of anyway, so it didn't give the issue a lot of thought. Now the issue has come up again and I can't help but wonder if I'm missing something.

My understanding of the limited scope audit was that if the assets were in the CUSTODY of a bank or insurance company or similarly regulated entity, that the auditor could perform a limited scope audit. The assertion that has been made to me is, that if one of these types of entities is not the TRUSTEE of the plan, a full scope audit must be performed.

I've read 29 CFR 2520.103-8 and do not see the word trustee anywhere. I guess I'm looking for a little reassurance that I'm not off my rocker.

Any input would be appreciated.

[rcline46]

Remember you are playing between the CPAs and the DOL. What the CPA is saying is they do not have a full trustee's report, certified by the trustee, as to the transactions and investments.

Without the report, they must do a full audit. The DOL regs tell the CPAs that if they cannot get a report by someone regulated, then the CPA has to check everything.

[Disco Stu]

I confused by these two statements that you made

One...

they do not have a full trustee's report, certified by the trustee

two...

if they cannot get a report by someone regulated, then the CPA has to check everything

In a hypothetical example, I have a client who's plan is self trusteed. The plan's investments are solely in pooled separate accounts at an insurance company. The insurance company provides a nice, certified annual report. Are you saying that the auditor will not do the limited scope audit because the annual report is not produced by the trustee?

[Guest Emiliano]

At the most recent AICPA conference on employee benefit plans, DOL's BMOC made it clear that the certifying institution need not be a trustee that a certification by a custodian would comply with that section of the regulations.

[austin3515]

In the auditors defense, I'm sure he/she picked that up due to the fact that we are told all the time (as auditors) that if a Plan is self trusteed they (the custodian) cannot provide a certification.

As the previous respondent indicated that is categorically untrue. I'm not certain why the auditor cares either, if they do in fact have a certified statement from a custodian...

If your in the New Engalnd area, respond - I'd be happy to have my firm do the limited scope audit...